UK businesses want legal certainty on transition more than an ambitious final Brexit deal

Legal certainty from a quickly agreed transition deal is of greater value to businesses than a more comprehensive trade deal later on, a new survey has suggested.

A survey of 280 chief executive officers and chief financial officers by accountant KPMG revealed that 68 per cent would prefer legal certainty on transition by April 2018 with a less ambitious future deal, rather than a more ambitious deal not agreed until much later.

Head of Brexit at KPMG James Stewart said: “Whether business leaders see Brexit as a burden or a great British opportunity, most regard certainty around transition as one of the fundamental building blocks for growth. Whilst the public is more fixated on the final deal, the CEOs we’re speaking to are often willing to accept a more modest deal in exchange for certainty so they can make investment decisions now.”

Twenty per cent of CEOs and CFOs said their businesses would not be able to operate as usual in March 2019 if there is no transition deal.

When asked what the effect would be on their firms if the UK and European Union do not reach a steady state transition agreement by April 2018, 33 percent expected a negative impact on their business, but 43 per cent expected their business to see some competitive advantage.

Stewart said: “Many people talk about Brexit as if it’s exclusively a negative force to be mitigated. But our clients often see it differently. Whilst over a third of companies expect some negative impact including job losses if a transition period isn’t agreed by April, many companies, particularly medium-sized challenger brands, see disruption as an opportunity.”

Meawhile, a new report from management consultants Oliver Wyman and law firm Clifford Chance has estimated Brexit red tape will cost EU and UK exporters £58bn a year.

The report examined what would happen if the UK and the EU moved to a World Trade Organisation (WTO) trading relationship with each other.

The report estimated that the cost of a move to WTO trading rules would be around £31bn for EU exporters and around £27bn for UK exporters, with non-tariff barriers accounting for more of the effect than tariffs.